Jim Neidelman:
Time now for this week’s edition of 4 Your Money. James Nelson, financial advisor, NelsonCorp Wealth Management joins us for a conversation right now. Great to see you again, James.
James Nelson:
Thanks, Jim. Good to be here.
Jim Neidelman:
It seems like some of that recent employment data has been somewhat soft. Besides the broad unemployment rate, what are you looking at to gauge the strength of the economic recovery?
James Nelson:
Yeah. So if you have been paying attention to the unemployment numbers recently, we have noticed an uptick in claims in the month of July, which isn’t great. But like everything with the economy, there’s a lot of nuance here. We’ve got a chart that describes some of these nuances that we take a peek at, and that’s the quit claims. And there’s a quit rate in our industry, it shows the total number of people quitting their job compared to a percentage of total employment, which may seem a little goofy, but it is something that we look at.
James Nelson:
And the reason we look at it is because the quit rate shows the number of people that feel like they can go get another job. They feel confident that the economic environment is conducive where they can quit and go find another job. Right now, we’re seeing that at all time highs as that chart showed there. And that’s showing a tightening in the labor market and it’s something that’s a little bit concerning. But again, that quit rate is actually a positive for the overall economic data. We view that as a positive. A lot of job opportunities out there right now.
Jim Neidelman:
What are some of the factors that you see influencing this in the second half of the year?
James Nelson:
Yeah. So the big one’s going to be the expiration of the unemployment benefits coming this year in September for a lot of folks. That might create some sense of urgency for the folks, some that are receiving those benefits right now, where they are going to come to a screeching halt at the end of the summer here. The infrastructure bill’s another one that we’re looking at, whether it’s a trillion dollars or $2 trillion, doesn’t really matter. If something gets done there, there’s going to be a lot of progress, a lot of jobs created through that. So we’re definitely keeping a close eye on that. And then so far through this recovery, consumer spending’s really driven a lot of the recovery. With some of these unemployment benefits coming to an end, does that hurt the consumer spending numbers if those folks don’t find employment quickly? Again, that’s another thing we’re watching later this year.
Jim Neidelman:
A lot to consider, definitely. What do you think people at home watching can take away from this to help them make investment decisions?
James Nelson:
Yeah. So a few things. I think the employment inflation numbers are the big story. What does employment look like the rest of this year? What do the labor numbers look like, again, when these unemployment benefits run out? Household income is up, and hopefully that continues. But with that, inflation is also up. So if inflation continues trending up, investments like tips and stocks in general, usually a pretty good sign for the markets if the inflation keeps trending up. And then higher income, does that translate into higher spending? So far, that has been the case. If that continues, probably a good thing for areas like retail and hospitality. They probably have a strong finish for this year.
Jim Neidelman:
James Nelson, NelsonCorp Wealth Management. Thanks so much for the analysis. Appreciate it.
James Nelson:
Thanks, Jim. Good to be here.
Jim Neidelman:
And if you missed any of this discussion, we have that available for you online at ourquadcities.com.